FALCONER & BABETT
[2016] FCCA 2439
•22 September 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FALCONER & BABETT | [2016] FCCA 2439 |
| Catchwords: FAMILY LAW – Property settlement – just and equitable division of the parties’ property. |
| Legislation: Child Support (Assessment) Act 1989 (Cth), ss.117(2), 136 Family Law Act ss.79, 75(2), 81 |
| In the Marriage of Gyselman (1992) FLC 92-2709 Keane v Keane and Ors (2013) FamCA 332 |
| Applicant: | MS FALCONER |
| Respondent: | MR BABETT |
| File Number: | SYC 6278 of 2011 |
| Judgment of: | Judge Henderson |
| Hearing date: | 17 June 2016 |
| Date of Last Submission: | 17 June 2016 |
| Delivered at: | Sydney |
| Delivered on: | 22 September 2016 |
REPRESENTATION
| Counsel for the Applicant: | Mr Wilson |
| Solicitors for the Applicant: | Carson & Associates |
| Counsel for the Respondent: | In Person |
ORDERS
By way of property alteration.
That the wife pay to the husband the sum of $11,400 within 6 months of the date of this order by way of property adjustment and that thereafter each party be entitled absolutely to all items of property, personality in their possession or control as at the date of these orders.
The husband’s entitlement specified in order 2 be extinguished upon the husband being credited with a payment of $11,400 towards his child support debt by the child support agency.
The Court declares that the husband has an interest in the amount of $8,000 in the wife’s self-managed superannuation fund.
The declaration under clause 4 to be extinguished upon the husband being credited with a payment of $8,000 towards his child support debt by the child support agency.
The wife to sign all documents necessary to bring into effect orders 3 and 5 at the request of the husband and/or the Agency.
That the husband do all acts and things necessary and signs all documents necessary to cause to be transferred to the wife his interest in:
(a)(omitted) Limited;
(b)The X Property Trust; and
(c)The (business omitted) Trust.
Thereafter the wife to indemnify the husband in respect of any liability of the above entities and they be declared hers absolutely.
Liberty to restore to either party to implement orders 3, 5, 6 and 7 on 7 days’ notice to the Court.
The wife’s application for a departure of administrative assessments of child support in respect of the children X born (omitted) 1998 and Y born (omitted) 2001 be dismissed save as follows:
(a)There be a departure from the Administrative Assessment of Child support for the child X as follows:
(i) For the period 5 September 2016 to 1 November 2017 the husband cause to pay one half of the child’s school fees whilst he attends at (omitted) School and when such fees are issued by the school.
(b)There be a departure from the Administrative Assessment of Child support for the child Y as follows:
(i) For the period 5 September 2106 to 1 November 2019 the husband cause to be paid gym fees for the child. This departure order to cease if:
A.The child fails to attend the gym on more than 3 consecutive occasion without a medical certificate; or
B.The child refuses to attend the gym.
Otherwise the Court affirms all child support assessments issued for the children X and Y.
That the husband complete and lodge his last 3 years tax returns by no later than 30 September 2016.
IT IS NOTED that publication of this judgment under the pseudonym Falconer & Babett is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 6278 of 2011
| MS FALCONER |
Applicant
And
| MR BABETT |
Respondent
REASONS FOR JUDGMENT
The matter of Falconer & Babett was heard on 8, 9 and 10 June 2016. The matter is a re-hearing after a successful appeal against orders made by Judge Scarlett on 13 November 2013. The matters concerns two applications. Property settlement and a child support departure application.
At the trial before me Mr Wilson of Counsel represented the wife and Mr Babett was self-represented. The evidence I read was, to say the least, voluminous and in the main, exceedingly unhelpful particularly the wife’s case which was a series of repetitions of moral turpitude against the husband, double counting of costs, statements of unfairness to her and her children with little focus on the real issues before me which was the division of the parties’ property and whether there ought be a departure from the assessed child support.
Suffice to say, the husband and wife have each waged a war against the other. The wife has waged a campaign against the husband since separation in relation to what she regards as his improper payment of child support namely too little, that he is not earning income that she asserts he has a capacity to earn and was earnt during the marriage and shortly after separation, that he is hiding his income and that the needs of her children are not being met by their father. A concern for me with the mother is that she is exhibiting signs of living in the past and is harking back to matters as they were in 2011 at separation rather than as I must do have regard to the position then however look at the reality of the parties lives today being their income and financial resources in 2016.
The husband filed an appeal against his Honours orders which appeal was bound to succeed given the errors in the judgement. However the wife did not concede the appeal and despite the Full Court’s decision asks I maintain all of his Honours orders. Unless the evidence leads me to that position I cannot follow His Honours orders as they were based on errors of fact and law. The time this matter has been in the Court system is a travesty for the parties and also their children.
The reality is the father has 2 sons with whom he has a minimal relationship and no regular time is spent with them. Although parenting was not a matter I was tasked to deal with this sad state of affairs has taken its toll on the father and the mother.
The evidence is as follows. The wife was the applicant. I was required to read:
a)Her financial statement of 27 April 2016;
b)Her affidavit of 19 February 2016;
c)Affidavit of 30 March 2016;
d)Affidavit of 17 May 2016;
e)Affidavit of her mother, Ms D, 7 May 2016;
f)An application in a case of 27 April 2016 in relation to child support; and
g)Affidavit of 27 April 2016 with three volumes of annexures to that affidavit consisting in excess of 500 pages.
For the husband I read:
a)His financial statement filed 28 April 2016;
b)Affidavit of the same date;
c)His application in a case filed 20 April 2016; and
d)His response, effectively for the trial before Judge Scarlett, filed in 5 February 2013.
Mr Wilson, most helpfully provided a case outline which assisted the Court greatly in addressing the issues before the Court and the husband also filed a case outline which, although only stated his position, was a helpful document. There was a balance sheet tendered at the last day of the trial in relation to the current asset base of the parties. There was some disagreement in relation to some of the matters, however, they were really of a minor compass and I will deal with that later.
The exhibits were voluminous. For the husband:
a)Exhibit 1: A child support letter sent to the husband on 6 June. That is a most important document the husband’s exhibit 1 because it changes somewhat the position in relation to child support.
b)Exhibit 2: The Husband’s 2013, 2014 and 2015 draft tax returns.
c)Exhibit 3: A loan document from (omitted) Bank to the Wife dated 30 July 2014.
d)Exhibit 4: Husband’s 2014-2015 payslips from a company known as (employer omitted).
e)Exhibit 5: (omitted) bank statements and a spreadsheet following those statements.
f)Exhibit 6: A letter from (omitted) Bank to the husband dated 20 October 2014 in relation to identity fraud which is accepted by the wife.
g)Exhibit 7: (omitted) bank statements of a joint account for a period 16 November 2010.
h)Exhibit 8: Email correspondence between the parties from 2011.
i)Exhibit 9: Certificate dated 25 February 2013 to say the husband has attended counselling.
j)Exhibit 10: (omitted) bank statements of his mother, Ms O, of a loan she gave to him.
k)Exhibit 11: Documents showing his redundancy from (employer omitted) dated 11 November 2013.
l)Exhibit 12: Superannuation statement of the husband’s super as at 30 June 2014 showing a transfer of $204,377.97 of the husband’s then superannuation to the wife pursuant to Judge Scarlett’s orders. The husband was not seized of that amount in superannuation at the time of the hearing.
m)Exhibit 13: A handwritten updated balance sheet as at 10 June 2016 which is the husband’s calculations of debts, assets, monies expended by each of them on credit cards and personal expenditure and the like.
n)Exhibit 14: Child support letter sent to the husband on 29 February 2016 in relation to asserted special needs of the child, Y, as sought by the wife.
The wife’s exhibits were:
a)Exhibit 1: An aide memoire from her in relation to costs for the children. An aide memoire prepared by the wife of what she says are the special needs and needs of her children on a weekly and ongoing basis. Wife’s exhibit 1 asserts that the special needs for X are $130 a week and the special needs for Y are $172 per week.
b)Exhibit 2: (omitted) Bank statement bundle of the husband’s account at and post separation.
c)Exhibit 3: Bundle of documents provided by the wife including balance sheet provided to Judge Scarlett, her mother’s affidavit already in evidence, credit cards from Mr G who did not give evidence before me, husband’s tax returns for 2010, 2011 and 2012, text messages, a letter from Y’s school saying he will benefit from additional educational support, that he has made strong progress in maths under tuition from tutors none of whom were on affidavit. Details of the significant sums the wife received post Judge Scarlett’s decision and her expenditure of that money.
d)Exhibit 4: Aide memoire regarding the husband’s spending since separation consisting of two documents being transfers from the husband’s (omitted) Bank account to his Visa card and aide memoire of withdrawals from his (omitted) Bank account both as to cash and transfers for credit card payments.
Court exhibit 1 was the agreed list of assets and liabilities which replaced the document given to the Court on the first day.
Suffice to say, despite the law being that family law proceedings are not accounting exercises, the wife attempted to turn this into an accounting exercise such is her outrage at the husband’s behaviour, the court system and the child support system. The wife has some justification for her outrage in each area.
Both parties were examined and cross-examined.
Judge Scarlett made mathematical errors in totalling the parties’ assets. He ascribed superannuation totals to them which simply did not match up with what they had at that time. For example in his decision he says that the wife had in her (omitted) superannuation fund $75,000 when it was $85,000 at that time. That the Husband's (omitted) superannuation fund was $246,476 when it was $190,000 at that time. He ordered the wife receive 70 per cent of the matrimonial pool. His orders ultimately resulted in her receiving 80 per cent of the matrimonial pool.
The orders were for reasons I cannot fathom not stayed and have been perfected insofar as property settlement is concerned.
The wife received effectively 80 per cent of the matrimonial pool including superannuation which was an inflated amount. The wife has expended all the money she received and has converted superannuation into a self-managed super fund which consists of a house.
The husband received nothing of the liquid assets only his personal effects and what was left in his superannuation fund being a mere 20% of an inflated figure and not as intended 30%. He was left with around 15% of his actual superannuation as at the date of judgment and a negative amount as at the date of hearing. Fortunately for the wife the husband’s superannuation had increased in the time between the hearing and the judgment of over 12 months.
Additionally his Honour failed to address the use by the wife of monies received post separation and prior to his judgment and those funds are significant. They are significant for both the husband and the wife as the evidence transpired. I have formed the view that during the marriage and post separation these parties simply spent what they had, were careless about the future, careless about being able to continue to spend at the level they were spending and as to what they had spent.
The wife’s case that she spent post separation monies, monies she received from the perfecting of Judge Scarlett’s orders, her income and paid child support on the needs of the children and so his Honour’s decision ought not be disturbed does not assist the Court one iota in the re-exercise of discretion. I accept she has spent every penny received.
It is for me to determine whether that level of expenditure by her has an impact on the final property orders to be made. A child’s need is but one part of the enquiry.
As the evidence revealed, since 2011, when the parties separated to about early 2015 the wife has spent in excess of $100,000 net per annum on her and the children’s needs. There is no doubt a large portion of these funds were spent on the children as the wife did not spend vast sums on herself.
As the evidence revealed the husband was for a period of 22 months from the date of separation in 2011 up to a date in 2012, spending some $10,000 per month on his needs alone. His spending significantly decreased after that period of time commensurate with his drop in income. The wife simply continued to spend what she had until she ran out of money and her claim now is that this level of expenditure was justified, my children’s special needs demand this level of expenditure continue, I require these payments from their father and he has the capacity to pay my demands.
The Full Court[1] held that His Honour made no connection with the costs of the children and their asserted special needs. His Honour failed to make a finding in relation to each child’s needs separately. His Honour failed to make any specific findings of the husband’s reasonable needs. There was no consideration of the liable parent’s capacity to pay the costs assessed as his Honour found them.
[1] Babett & Falconer [2015] FamCAFC 124.
At the hearing before me there were some concessions made. The first concession is the husband agrees that his Honour’s assessment that the wife was entitled to 70 per cent of the then matrimonial pool, including superannuation was a correct assessment and Mr Babett does not seek to challenge that. The issue for me is 70 per cent of what?’ to which I will later return.
The husband agrees his son Y is on the autism spectrum, however, his case is that this does not, of itself, mean he has special needs and the needs claimed by the wife, for example, gym fees, coaching for maths and English, in her Exhibit 1, psychological counselling, compulsory things such as computers and the like, are not special needs related to his autism.
The orthodontic claim for the children was accepted by the Agency as special need. The wife obtained a loan from her mother to pay that amount and repays that on a weekly basis at some $13 per week. The Child Support Agency has dealt with that issue and an assessment has issued taking into account this need and increased the husband’s liability for child support.
Private school fees were determined by his Honour, Judge Scarlett, and the Child Support Agency as a special need of the children as the parties had determined that their children should attend a private school and that being their intention it is a ground for a departure. An assessment issued accordingly.
The issues at large in the child support departure application are that the wife continues to assert the ongoing payments of private school fees, orthodontic payments and the additional matters such as counselling, tutoring and the like are special needs of her children and must be met by their father alone.
The circumstances have changed for both the children since His Honours orders issued in 2014. The first is Y is no longer at a private school and attends a public school as there was simply no money to continue to pay his fees. The older boy, X, is to complete his high school certificate next year and he continues to attend a private school being (omitted) School.
The husband made these concessions at the conclusion of the trial in relation to child support:
a)It would be a tragedy for his son not to continue at his private school and he will voluntarily pay one half of his son’s private school fees into 2017 until he completes his secondary school education when he will be 18 going on 19.
b)Secondly, he will pay for and take his younger son, Y, to gym as Y is seriously overweight a condition I cannot, on any evidence before me see relates to his autism but must be clearly related to his diet and his father will take over that task and pay those costs.
c)That the father appropriately does not seek payment of any money to him by the wife by way of a cash adjustment should I so determine. Any adjustment would be from her superannuation or an off- set against his current child support debt. He conceded it would be a tragedy for these boys to have to leave the home their mother has purchased post separation for them.
The husband seeks a departure order of child support going back more than 18 months his special circumstances of the case being that he is desirous of there being no further claims by the wife going back in time about these matters and he wishes it to be over now and for me to make clear what the assessments should have been in the past and what they will be based upon and are to be into the future. Thus, the husband seeks a departure order, similarly, as does the wife but for vastly different reasons.
I still need to determine whether there are special circumstances supporting the exercising my discretion to make a departure order of any nature let alone a departure order going back more than 18 months.
Husband’s exhibit 1 is a document from the Child Support Agency. The Agency has gone back over three decisions made by the tribunal and they have determined to set aside three decisions giving the husband credits for non-Agency payments in June, July and August 2011 totalling $1,318.80, in September 2011 for $439.60, for future credits of $1,758 and five payments totalling $1,058.40 for February, March, April, May and June 2012 being a total of $5,292.
All those non-Agency payments, which were credited by the Agency to the husband, thereby reducing any arrears of child support, have now been disallowed and the husband has a current child support debt of $18,033. The husband says today, “I will accept that as being correct. I will accept what the Agency has done going back, as they have done, to 2011, and disallowing non-Agency payments that they had previously credited me with.” And, therefore, the husband agrees today he has a child support debt of $18,033.
Dealing with a division of the property of the parties. I have formed the view that the asset base I look at today will be the current asset base. I have no capacity to determine what it was at the date of His Honour’s orders. His Honour’s own balance sheet was incorrect and were carried out by the parties. No stay was granted of those orders and the only equitable way to deal with this is to look at what the parties have today, what they have had in the past and make an adjustment in accordance with the usual principles in property matters under section 79 of the Act settlement and section 75(2) including 75(2)o being any other matter that the Court determines justice and equity require the Court to consider.
The parties’ current asserted asset base is as follows:
a)The wife has a home worth $610,000.
b)An (vehicle omitted) car worth $12,000.
c)A (vehicle omitted) ute worth $7,000 that X, drives to attend a school in (omitted) when he lives with his mother and brother in (omitted).
d)A Honda motorbike worth $5,000.
e)Household contents of $3,000.
f)The husband has a (vehicle omitted) worth $10,000.
g)His house contents are worth $1,380.
The husband disputes the value of the (vehicle omitted) and the wife’s contents. He puts in evidence as the value of the (vehicle omitted) $30,000. The wife has a significant debt on that car of $32,000. All I have today is the Redbook value that has been supplied by the parties. The wife’s value of $12,000 is difficult for me to accept because, as the husband properly pointed out the Redbook car the wife had produced in evidence is not the same car that she drives and I will ascribe a value to that car of $20,000.
The wife’s contents at $3,000. The husband disputes this sum as at the time she bought her property in 2014, she ascribed a value of $50,000 to her contents and the husband says this is a significant undervalue. I accept the husband’s position and I will allow $10,000 for contents.
That is, then, assets are put in the table $663,380 or $663,000 rounded down.
The wife will be receiving the (omitted) Property Limited, the X Property Trust and Babett Property Trust. The wife says these entities have a value in carrying forward losses for depreciation. If the wife can use that depreciation loss the husband is content to allow her to have that and seeks no adjustment for any asserted value.
There is $663,000 for division excluding super. Save for $11,380 all the assets for division are in the wife’s possession or control.
There are significant debts.
The wife has a mortgage to (omitted) Bank of $361,824 and a loan to Mr S which she used to purchase her home of $115,000. There is an asserted debt to her mother of $156,000. The husband disputes that debt but accepts a debt to the wife’s mother of $78,500 and that will be the subject of a determination by me. The wife has a debt of $32,000 in respect to her (vehicle omitted) car. She has a (omitted) MasterCard debt of $4,300. I will disallow that debt it does not from part of the matrimonial debts however note it is alive for the wife. The wife has a debt for legal fees of $25,000. I will disallow that debt as it is not a matrimonial debt having been incurred post separation but note it is alive for the wife.
The husband has a (omitted) Credit Card with a debt of $286. I will disallow that debt. It is not a matrimonial debt.
There is a debt of $10,355 in relation to (omitted) College for school fees which is referrable to the children and is a debt I will allow as owing by each party.
The parties have paid legal costs during the proceedings and some of these costs were paid from matrimonial property. They are for the husband $54,000 and the wife $65,000. I am asked to add those back into the matrimonial pool. I propose not to do that. I will not be adding back legal fees the parties paid in 2012/2013 for reasons that will become apparent later. To do so will only add further confusion to an already tangled web.
What I will have regard to and deal with is expenditure of monies available to the parties post separation and post his Honour’s judgment. What they chose to spend their money on is entirely a matter for them. I do not propose to do a tracing exercise of every amount expended or received however monies available and expended post separation is an important issue to deal with as is their current financial position today. This is the only way I can, after 5 years post separation do justice and equity between them.
The wife has a self-managed super fund which consists of a home. I have no valuation of that other than what her self-managed super fund tax returns tell me it is worth which is net $287,081. I have no specific evidence of the value of this property but the husband has accepted that this is the value of the wife’s current self-managed super fund. The husband has $111,000 in his (omitted) Funds Management.
The wife purchased the property comprised in her self-managed super fund after monies were transferred to her from the husband’s superannuation fund pursuant to orders made by Judge Scarlett.
It is agreed that the husband will possibly be entitled to some 20-odd thousand dollars in tax refunds this financial year when he files his tax returns for the years 2013, 2014 and 2015. He says he will file these no later than end of September 2016 and I will so order he do.
The wife will also have a substantial tax refund when she files her tax return for the year ended 2016 given her self-managed super fund losses and her own income losses. Since separation the wife has had the benefit of significant income tax returns and she and the husband have effectively paid no or little tax because of their business losses.
The mortgage debts are $361, 115.
Debt to Mr S $115,000.
$78,500 the husband agrees as owing to the wife’s parents.
$32,000 wife’s car.
(omitted) School $10,355.
These debts total $596,970 rounded up $597,000. The assets are $663,000. This gives a potential net equity of $66,000.
If I accept the wife’s position that she owes her mother $156,000, rather than the $78,500 that the husband agrees she owes her, there will be a negative equity of $11,500.
Thus the best position is that of the liquid assets there may be $66,000 or at worst negative $11,500.
Given that any finding by me as to the net assets has a degree of artifice about it that this matter ran in circumstances where there may ultimately be a negative liquid asset pool of $11,500 is a travesty at every level.
What clearly is in existence is superannuation which today totals $398,000 of which the wife has $287,000 and the husband $111,000.
The wife’s case is that her debts exceed her assets. Apart from his superannuation, the husband has no assets whatsoever for it is clear to me that the wife received, from his Honour’s decision, virtually all the liquid cash that was available in various accounts, trust accounts and the like and a large amount from the husband’s superannuation fund.
It is a fruitless and pointless exercise for me to add back legal fees that have been paid, monies that have been expended when these monies no longer exist. They have been spent. This Court cannot recreate for these parties assets they had at separation or at the time of the delivery of his Honour’s judgment. I am tasked today to deal with what the parties have and their financial position is far worse than it was in 2011 when they separated and in 2014 when his Honour delivered his judgment.
Short and Relevant Chronology
The husband is 50 years of age.
The wife is 43.
They commenced living together in (omitted) 1997.
X was born on (omitted) 1998. He is currently 17 years of age and will be turning 19 years of age before he leaves school.
Y was born on (omitted) 2001. He is currently 15 years of age and he too will turn 19 years of age before he leaves school.
The parties were married in (omitted) 2001.
They separated under the one roof in March 2010 but continued to make payments and the like.
8 May 2011 is the seminal point in this matter. The husband moved out of the family home.
The matter was listed for hearing before Judge Scarlett on 15 and 16 May 2013 and the appeal was heard on 3 February 2015.
I can find no assets that either party has other than what is in the balance sheet. The husband has no assets at all. Any assets that the parties had are now in the wife’s possession or control and the only significant assets are the parties’ respective superannuation entitlements.
Before I determine the parties’ entitlement, I must, as I said at the outset of this judgment, what is comprised in the agreed split of 70/30.
Looking at the superannuation, that is fairly clear. The husband’s superannuation on the balance sheet, the agreed balance sheet, is $111,229 and the wife’s is $287,081. That is a total of $398,310. A 70/30 split of that would be $119,493 to the husband. He is seized of $111,000. That would be a payment to him of $8,000 by the wife.
Neither party sought, ultimately, that there be a super splitting order such that the wife and husband continue to have a financial relationship. Neither wished for that to occur. Given the wife has the bulk of super and it is in a self- managed super fund and my obligations under section 81 of the Act[2], that is a sensible approach.
[2] Family Law Act 1975, s81.
If the husband’s entitlement to the superannuation pool is $8,000 I would determine that that would be offset against his child support liability which currently stands at $18,000 odd. If I determine that is appropriate, at the end of the day that is the order I would make.
Going now to the evidence of the loan to Ms D, the wife’s mother. Both the mother and her mother have a very harsh view of the father. The grandmother’s first affidavit of 12 May 2016[3] reads this:
“…I have a loan agreement… with our daughter, Ms C, as she has borrowed $9,000 to cover (omitted) College fees for Y and X. The debt is due to Mr Babett not honouring court orders of 13/11/13 whereby he was liable to pay all school fees for the children’s attendance.”
[3] Affidavit of Ms D sworn 7 May 2016, paragraph 1.
That is a grossly unfair comment to make when those orders were set aside. The wife is paying that loan off, as I accept she is paying off the loan for the orthodontic work and that is part of her weekly expenses and costs of the children and an assessment has issued for those costs as against the husband.
I am satisfied that the mother and grandmother have a sort of ongoing overdraft which, as at the date of the grandmother swearing of her affidavit, was about $40,000. The mother pays her mother back monies her mother gives her money, and it seems to be an ongoing overdraft that the wife accesses when she needs.
The evidence of how the loan to her mother came about is exceedingly confusing however I will do the best I can.
A sum of $100,000 from proceeds of sale of the Property E, the mother’s parents’ home, was placed into a lawyer’s trust account then directed to their other daughter, Ms E, to reduce her mortgage. This money was withdrawn in July 2014 by Ms E and paid to the wife to assist her to purchase the property she and the children live in.
That money, $100,000, is interest free. That money, together with the monies from Mr S and the loan from (omitted) Bank, is what the wife said she used to purchase the home she and the children live in.
However, what the wife has done is to muddy that somewhat clear position. The wife repaid her sister, Ms E, living costs of $10,000 in 2015 and $ 25,000 for legal costs, paid her mother $25,000 for nanny costs pursuant to an agreement she and her mother entered into when the wife had to return to work. These re-payments reduced monies in her control and possession by $60,000.
I do not accept the nanny loan to the grandmother. The grandmother has not made a demand for those monies. There was no agreement between them that I was referred to rather a schedule of costs the grandmother claimed she had expended in the care of her grandchildren. The grandmother’s affidavit is extremely difficult to understand. This agreement was not part of the case before his Honour.
Her affidavit of 9 April 2013 states at paragraph 7:
“Since separation have financially assisted Ms C and my grandchildren. Annexed hereto and marked “A” is a schedule prepared by me setting out the monies I have loaned to Ms C to assist her in meeting her day to day living expenses for herself and the children
paragraph 8. … Ms C has mainly repaid these monies to me. I will continue to advance money to Ms C if she requires it.”
The grandmother gives a schedule of costs going back to January 2011 when the parties were still living together claiming costs of taking her grandchildren on a holiday to Queensland. Claiming costs of caring for her grandchildren in school holidays of $1,500. Holidays to Queensland $3,000. I simply reject that the wife is required to pay that money to her mother. I do not accept that is proper or justified in any fashion.
The wife paid her mother $25,000 for her own reasons. However to assert this was due to an agreement for nanny costs is not made out. It is not a matrimonial debt in any event. The wife has included that amount in the total costs she says she owes her mother of $156,000 yet the money was repaid to her mother. This results in a double counting of claims and costs at times. I have disallowed the claim yet it has been re-paid to the wife’s mother.
Having found that this sum was never a loan and that it was included in the wife’s debts yet had has been paid the asserted existing loan to the wife’s mother is reduced by $50,000.
This reduces monies owing to the wife’s mother to $106,000 which is an interest free loan re payable on demand. This is the debt I accept the wife owes to her mother.
That, then, gives total debts I will allow as follows:
a)$361,824 to (omitted) Bank.
b)$115,000 to Mr S.
c)$106,000 to the wife’s parents.
d)$32,000 for her car.
e)$10,355 (omitted) School.
Total $625,179 or $625,000 rounded down. All debts are the wife’s as the husband has no debts.
The net pool is $663,000. The debts are $625,000. This leaves an amount of $38,000 to divide between the parties on a 70/30 split. However it is not that simple for I am tasked to determine the use by the parties of post separation funds and that determination may affect my decision on the division of this meagre sum.
The wife has substantial monies post separation. The wife received $156,000 when the parties sold their former matrimonial home on 8 July 2011 by agreement. At separation the wife had drawn down the parties various mortgages to total $71,000. Thus prior to his Honours decision the wife received $228,000.
The wife then had paid to her additional sums, being $38,000 and $29,000 by his Honours orders. This totals $289,000.
The wife received $204,377 by way of a super splitting order. This sum together with her then superannuation of $79,000 totalled $284,000 in 2014.This has translated to $287,000 today.
The cash the wife received has been entirely spent by her and she has increased her indebtedness. What the wife did with the monies received post-separation was spend it upon her children and in purchasing a home for her and them. The expenditure the wife deemed appropriate was continuing private school fees, (hobby omitted) lessons at a cost of $7,000 for the older boy, tutoring, gym fees, counselling, purchase of a new car, legal fees, accountants fees and she spent money on what she regarded were appropriate needs for herself and her children.
I did a calculation during the hearing that from 2011 to date, 5.5 years, the wife had the benefit of monies taken at separation of $228,000, monies received from his Honour’s judgment of $67,000, her income during that period of no less than $165,000 nett, child support of $120,000 totalling $580,000. This is $105,000 per year nett or some $9,000 per month nett.
In relation to the wife’s income it has been low and has steadily increased. However due to the structure by which she earns her income she has effectively never paid tax and it has been refunded to her each year. For example in 2011 her net income was $20,000; in 2012 it was $26,000; in 2013 it was $35,000 in 2014 it was $16,000. Her tax refund in 2011 was $22,000 thus her assertion she received a nil income in 2011 as that is what her tax return says is incorrect for these purposes.
In 2012 she had returned to her all the tax paid of $7,330 on her income of $54,000. Thus her income was $54,000.
Property matters are not an accounting exercise. I have no intention of working out every dollar the wife spent however some of her choices are not necessary for her or the children on the evidence before me.
(hobby omitted) costs of some $7,000 for (omitted) fees for her son, X is not a necessary expenditure. That was a choice she made. There is simply no evidence to support X’s need for maths tutoring. It may be desirable and of assistance but to assert on the evidence it was necessary is not made out by the wife.
In addition to having had around $9,500 a month nett to support herself and her sons the wife now has debts to her mother and Mr S totalling $250,000. The wife has chosen to expend money as if the lifestyle she enjoyed prior to the marriage breakdown would continue indefinitely.
On the other hand having made these findings in relation to the wife’s expenditure of money post separation the husband also spent all the money he earned as he saw fit. This is apparent from a perusal of his bank statements, tendered and marked wife’s exhibits 4 and 2. One can see as at separation in March 2011 the husband had some $20,000 in his bank account. That was the parties’ money, as was the $71,000 the wife took.
Over the period from March 2011 to 16 December 2112 the husband was working for (employer omitted) and earning a net income of $11,643 a month. After paying his child support he spent every single cent he earned effectively on his own needs.
He was making payments on his credit card of $5,400 on 16 December 2012, whilst at the same time withdrawing, for example on 21 November, significant sums of cash of $4,000. The husband’s case is he would take $4,000, maybe $5,000 cash out, use that for spending money and pay his bills which bills included credit card payments. Clearly that is not correct at that time.
Wife’s exhibit 4 tells me that in the months of 21 May 2012 through to 5 October 2012 the husband paid $30,000 off his credit card in a period of six months. That together with withdrawals of $4,000, $5,000 per month in cash is him expending all the money he earnt.
Thus the husband has as has the wife spent all the money they had. There are 2 differences however the wife had 3 people to support, the husband only had himself. Secondly the wife’s expenditure of $9,000 a month continued for many years post separation. The husband’s excessive expenditure reduced as his income reduced and from 2012 his expenditure significantly decreased.
Some of his expenditure included holidays with his children, for example but most of it was expenditure by him for him. One occasion he went to a casino on his own evidence had a big night out, withdrew $9,000 at (omitted) on 3 June 2011 and blew it at the casino.
The husband behaved in precisely the same fashion as the wife and just spent all the money he had. He would say it was because he’s depressed and/or upset about the breakdown of the marriage. Perhaps that is true but the reality today is he has no money anywhere. It is not hidden or secreted away he has spent it.
The husband lost his position with (employer omitted) in May 2013. His income reduced from $11,000 net per month to $5860 per month and his expenditure reduced accordingly. By a perusal of his bank accounts one can see his expenditure dropping in harmony with his reduced income. His income at its height of nett $11,000 per month in May 2013 reduced to $7,000 in 24 June 2013, $5,000 in July 2013.
He obtained a new position with (employer omitted) in in June/July 2013. This employment was a matter of contention for his Honour. The structure and payment of his income from (employer omitted) reduced the child support he was to pay due to some arrangement whereby his legal fees were paid by the company. The Child Support Agency worked out that (employer omitted) had reduced his income by half in reducing his income from what it should have been of $140,000 pa to a mere $70,000 pa. The Child Support Agency were aware of this unusual accounting practice, dealt with it and made the appropriate child support assessment calculations on his actual income, not the artifice that was created by some strange accounting exercise.
In 18 March 2015, the husband’s income is nett $1,400 a week and the husband’s expenditure reduces accordingly.
He is not paying $5,000 to $6,000 a month off his credit card. The figure is $1500 per month. He is paying child support of $1,950 per month leaving him with $2450 a month.
The husband was first made redundant from (employer omitted) on 11 November 2013. A strange event occurred whereby he was offered immediately another similarly titled job at a lower rate of pay Again these issues were dealt with by the Agency in a decision of in May 2012. Those issues were determined by the Child Support Agency but the wife is not content.
The husband was made redundant for a second time from (employer omitted) on 9 April 2015 and received a redundancy payment of $16,154. The wife claims this money should have gone to her to discharge in part his child support arrears however as the husband said he had no money to live on, could not obtain centre link benefits and is now self-employed and has been since 5 June 2015 in a company he incorporated called (business omitted).
The husband has one client called (omitted) and he tells me he is endeavouring to build up his business as a (omitted) which is his area of skill training and expertise. It is fairly clear that the husband has lived within his income as he has virtually no debt nor does he have any assets other than his superannuation. It is fairly clear the wife has not lived within her income and although she has assets on her case her debts exceed her assets.
Given that history I do not propose to make any further adjustment to the agreed 70/30 split of property. There is at best $38,000 to divide between the parties and this is a payment of $11,400 to the husband by the wife. The wife in reality received 80% of the matrimonial property although his Honours orders were she receives 70%. The parties have agreed today that a 70/30 split in the wife’s favour is appropriate. In light of these facts I propose that the husband receive a credit of $11,400 in relation to his child support debt. That together with his superannuation adjustment of $8,000 is an offset towards his child support debt of $19,400.
This is the only just and equitable way to deal with this disaster.
I am satisfied today that the income the husband has disclosed in his financial statement namely gross $800 per week is as reasonable an assessment of his income as can be made at this time and is the only income he earns. Further I am satisfied he has no other financial resource income or assets other than his superannuation. Finally I am satisfied he is maximising his income earning capacity and the reasons for these findings will follow.
DEPARTURE APPLICATION
Going now to the departure application. The wife’s case seems to be, “My sons have special needs.” That is simply not the law. Those special needs have to be proven. The Agency has not accepted all the special needs the wife asserts her sons have.
Matters to which the court takes into account in a departure application.
The grounds for departure are as follows under section 117(2)[4]:
[4] Child Support (Assessment) Act 1989 (Cth), s 117(2)
(a)that, in the special circumstances of the case, the capacity of either parent to provide financial support for the child is significantly reduced because of:
(i)the duty of the parent to maintain any other child or another person; or
(ii)special needs of any other child or another person that the parent has a duty to maintain; or
(iii)commitments of the parent necessary to enable the parent to support:
(A) himself or herself; or
(B) any other child or another person that the parent has a duty to maintain; or
(iv)high costs involved in enabling a parent to spend time with, or communicate with, any other child or another person that the parent has a duty to maintain;
(aa) that, in the special circumstances of the case, the capacity of either parent to provide financial support for the child is significantly reduced because of the responsibility of the parent to maintain a resident child of the parent (see subsection (10));
(b)that, in the special circumstances of the case, the costs of maintaining the child are significantly affected:
(i)because of high costs involved in enabling a parent to spend time with, or communicate with, the child; or
(ia) because of special needs of the child; or
(ib) because of high child care costs in relation to the child; or
(ii)because the child is being cared for, educated or trained in the manner that was expected by his or her parents;
(c)that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:
(i)because of the income, earning capacity, property and financial resources of the child; or
(ia) because of the income, property and financial resources of either parent; or
(ib) because of the earning capacity of either parent; or
(ii)because of any payments, and any transfer or settlement of property, made or to be made (whether under this Act, the Family Law Act 1975or otherwise) by the liable parent to the child, to the carer entitled to child support or to any other person for the benefit of the child.
One special circumstance in this case is that the wife received, effectively, all the liquid assets the parties had being 80% of those assets and 80% of the husband’s inflated and incorrect superannuation when the intention of the orders was that she receive 70%.
Before even assessing the children’s special needs I will look at the parents capacity to pay any amount over and above the child support assessed. For if the father does not have any capacity to pay over and above the assessed child support then whether the children have special needs or not is irrelevant.
The husband has commenced an embryonic business after having been made redundant three times in the last 5 years none of which was as a result of his behaviour or at his request. I am completely satisfied that he is maximising his earning capacity and that he is using his years of experience and contacts in the (omitted) industry to grow his business. He told me he needs to make a success of this for he has nothing other than some superannuation. I agree with him he is on his knees financially and has been for some time.
I am satisfied today the husband is not hiding any assets. He has nothing but his superannuation. It is nonsense and against the weight of the evidence to suggest this man can earn $224,000 per annum today as the wife continues to assert he can.
The wife is living in the past and the Court processes have not assisted her to move forward and accept the reality of life for herself, her children and their father. The husband has not held such a senior position which provided him with this level of income for over 3 years despite having been in the workforce continually and in the same area of work.
In relation to school fees the father has claimed he has not had the capacity to pay assessed child support and school fees for some years, at least since he lost his position with (employer omitted) in May 2013. Merely because whilst together the parents wished their children to be educated in the private system is not solely determinative of the matter. Parents need to be able to afford school fees and all the other essential costs in raising children. It is a pointless and futile exercise to order a parent to pay a cost they cannot afford unless I am satisfied that a parent is minimising their income or not exercising their income earning capacity or hiding or minimising their wealth.
The reality is the parents have not been able to afford private school fees since the husband lost his job with (employer omitted) in 2013. The perpetration of the fantasy that the husband is able to earn his 2013 income today but is choosing not to has resulted in the wife continuing to live beyond her means. There is no money, no unexercised earning capacity or underutilisation of an earning capacity by either parent. The wife maximises her earning capacity at around $60,000 per annum and the husband was also maximising his earning capacity and paying his assessed child support until he was made redundant for the third time in June 2015. He is now self-employed in an embryonic business and his income is at this stage uncertain but the evidence states it has been around $800 per week gross and I accept that figure.
The Agency corrected the accounting error when the husband worked for (employer omitted) and his income for child support purposes had been improperly reduced. The Agency disallowed certain non-agency payments the husband made which had been allowed in the past and his child support debt has increased and he accepts that debt today.
The evidence does not satisfy me that there ought to be a departure from the assessment of child support for either child in the past or into the future having regard to the parties’ financial resources, income and income earning capacity or their property.
As to the children’s asserted special needs.
Looking at the relevant case law In the Marriage of Gyselman (1992) FLC 92-2709 the Full Court opines on the meaning of special circumstances in section 117:
“Whilst it is not possible to find with precision the meaning of that term, as a generality it is intended to emphasise that the facts of the case must be establish something that is special or out of the ordinary. That is, the intention of the legislature is that the Court will not interfere with the administrative formula result in the ordinary run of cases.”
Justice Watts’ decision in Keane v Keane and Ors (2013) FamCA 332 deals with the meaning of special and exceptional circumstances in various parts of the Family Law Act and Child Support legislation being section 117(2) special circumstances and section 136CSSA exceptional circumstances. His Honour concludes that there is considerable merit in the view that there is a difference between exceptional and special circumstances see paragraph 66 of His Honours judgement and I agree with His Honours obiter.
The test to set aside a Binding Child Support agreement under section 136(2)(3)(c) of the CSSA is exceptional circumstances and is a high bar and must be uncommon, out of the ordinary and not routine or usual. The special needs of a child may be routine i.e. a need for counselling or tutoring but be a special need for a particular child.
What are the special needs for each child as asserted by the mother?
The agency rejected the wife’s bald assertions of special needs for her children in their decision of 29 February 2016 after hearing an objection by the wife as follows:
a)Y’s paediatrician’s assessment in 2011 did not recommend tutoring;
b)An (omitted) consultation dated 6 August 2015 did not make any recommendation for tutoring for either child;
c)No report cards recommended tutoring for the children;
d)Purchase of a computer for Y was not a special need; and
e)Y’s gym membership was not a special need.
Orthodontic work for the boys and X’s ankle surgery were considered special needs and an assessment issued accordingly.
The evidence provided by the mother today regarding the children’s special needs is the same. There is insufficient evidence to satisfy me the Agency has made any error or that the matters of tutoring etc. raised by the mother are special needs.
There is no up to date medical evidence in relation to Y’s asserted needs for counselling and the mother needs to provide evidence from the relevant health professionals to satisfy the requirement to make out a special need under the meaning of the Act. It is not enough that the mother believes her children have special needs.
X has no special needs on the evidence before me. The Agency determined and I find that the wife has chosen to have him maths tutored, take part in (hobby omitted) because that is what he wants to do. That is appropriate and I make no criticism however these are not special needs or out of the ordinary. X is a perfectly together boy, doing well and attaining to the best of his ability.
The husband has agreed to pay half of X’s private school fees to enable him to finish his HSC in 2017 at that school. He says he can fund these additional costs over and above the child support assessment from an anticipated tax refund of $20,000 he will receive when he lodges his next 3 years tax returns and I will so order. To ensure these payments do not reduce any child support he is assessed to pay I will make a departure order for those costs.
Going to Y.
The evidence the mother has produced in relation to Y and his special needs is sorely lacking. The mother says he needs psychological counselling. He is depressed. He is overweight. The mother chooses for the child to attend private psychological assessment. There are services available which would be free or at a much reduced rate given his autism. There was no evidence of the mother exploring any of the Autistic Societies or Head Space or other agencies which assist children and parents in these areas at a much reduced fee base.
There is no comprehensive up to date report by a qualified specialist practitioner or health provider or educator of his special need for maths tutoring, English tutoring, counselling and the like. There are e-mails from a teacher to the mother, recommendations of interventions that would assist him or be desirable but this evidence is minimalist at best, is confused, out of date and at times not in the correct form to be accepted into evidence.
Having said that the child is autistic and it is a pity that the severity of his autism is not before me in any acceptable form such an up to date comprehensive medical report to enable me to find that he may have special needs over and above the normal to assist him to benefit from mainstream schooling. I note the father the father says he will pay for and take Y to the gym.
I have formed the view that although Y may have special needs those needs have not been supported by clear and cogent evidence and I am unable to assess the extent of his special needs over and above that which the Agency has assessed are his special needs.
I will as with X make a departure order for gym fees for the child to be paid by the father in addition to the assessed child support. However otherwise I am not satisfied on the evidence that there are special circumstances or that the child has special needs warranting me to depart from the assessed child support for any period of time and confirm the assessments issued in respect of Y thus far stand.
At the end of the day the on the question of whether the father has a capacity to pay towards a special need of his child even if I found a special need exited on the evidence today is that the father does not. He can only pay for X’s school fees and Y’s gym membership from his anticipated tax return and not from his income gross of $800 per week. The father must accommodate and feed himself and pay his assessed child support of $150.54 a week. His rent is $334 a week, tax $73 which may be returned to him, superannuation $73 leaving him with $170 a week for food clothing and the like.
Apart from these two matters which the husband has conceded, I am not satisfied on the evidence that there are special needs of the children warranting me to depart from the assessed child support for any period of time in the past for either child and confirm the assessments issued in respect of X and Y as correct.
Secondly I am not satisfied that the father has an unexercised earning capacity or is choosing to minimise his earning capacity or has a capacity to pay child support over that assessed on his income for his income is all that he has. The evidence is to the contrary and it is clear the school fees and gym fees will be paid for from his tax return.
I find there is a basis for a departure order into the future for the child X being his father’s agreement to pay half his school fees and for Y his gym membership fees to ensure the child support the mother does receive is not reduced due to these payments and I am only carrying out this step due to the fathers’ concession to pay same and that he will have a fund with which to pay those costs.
I find today that the mother has failed to satisfy me that the husband has an unexercised income earning capacity, property or financial resources such that he should be ordered to pay child support over and above that assessed by the agency.
A further factor acting upon my discretion was that the mother received all the liquid assets of the parties save for the $20,000 in the husband’s bank account at separation and 10% more than His Honour determined she should have had received. Thus the husband has supported his family with those monies that should have properly been his and thus he has supported his family with his income and financial resources in the past and I will not disturb the assessments that have issued.
I certify that the preceding one hundred and fifty–three (153) paragraphs are a true copy of the reasons for judgment of Judge Henderson
Date: 22 September 2016
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